Dominic Scriven, Chairman of Dragon Capital, one of Vietnam’s leading investment firms.
Hanoi (VNA) – Vietnam has been successfully developed a stock market, with the capital market playing a critical role in the economy, according to Dominic Scriven, Chairman of Dragon Capital, one of Vietnam’s leading investment firms.
Dragon Capital was established in 1994, six years before Vietnam’s stock market was launched, so the firm has followed the market since the earliest days, Scriven said.
The stock market used to be a brand-new concept in Vietnam when it was founded 20 years ago. There were only two companies listed on the stock market when it was first introduced, he said, now the number has grown into 1,600 and a wide range of markets for derivatives, such as bonds, stocks and over-the-counter (OTC) have been developed.
Starting from zero, Vietnam’s stock market has gone through many ups and downs to reach its current size, he added, which is a remarkable achievement.
Scriven continued to state that, when “life” was given to the stock market, it is the responsibility of stakeholders to nurture and grow it. Various new concepts have been developed to build up the stock market and to help it expand larger in terms of scale and role.
After 20 years, the size of Vietnam’s capital market, which includes the stock and bond markets, is now fairly close to the older and more widely-known banking system, he said. The government has adopted policies on medium- and long-term capital sources that encourage enterprises to access the capital market.
The outlook for the capital market in Vietnam is very promising, Scriven noted, but it comes together with both opportunities and challenges.
Vietnam Enterprises Investment Limited, a member of Dragon Capital, is one of Vietnam’s largest investment funds, listed on the Main Market of the London Stock Exchange. (Photo: VietnamPlus)
Investment funds were among the stakeholders of Vietnam’s stock market since its early days, together with listed companies, securities firms, fund operators, stock exchanges, custodian banks and more, he said.
There were times when those entities had grown excessively, for example, the number of securities firms used to exceed 100 while there were more than 50 fund management companies, he noted. Fierce competition and restructuring have forced those with poor performances out of the market while the others enjoyed robust growth.
Scriven said Vietnam now has about ten major securities firms and several well-performing fund management companies and custodian banks.
However, commercial banks still play a key role in the bond market with a majority of transactions, he said. Investment funds, however, have only taken a small amount.
Soon, the Vietnamese stock market will no longer attract more professional and large foreign investors without fund operators, he said, adding that they must be from Vietnam, not overseas.
The stock market opened its first trading session on July 28, 2000 on the Ho Chi Minh Stock Exchange (HoSE), with only two public firms, coded REE and SAM.
By June 2020, there were 380 stocks on HoSE with more than 2.3 million investor accounts and market capitalisation of over 2.8 quadrillion VND (120.4 billion USD), or 57 percent of GDP.
The maturity of Vietnam’s stock market is marked by the increasing interest of foreign investors, who are rising in number each year by 10 to 15 percent. As of the end of 2019, there were nearly 34,000 foreign investor accounts, with nearly 21 percent of market capitalisation. This figure, according to analysts, is still modest.
Total mobilised capital so far is estimated at over 295,000 trillion VND. During the 2010-2015 period, mobilisation increased more than five times compared to 2004-2009.
The amended Securities Law passed by the National Assembly in November 2019 has laid legal foundation for Vietnam’s stock market to operate more efficiently and transparently.
The stock market targets capitalisation representing 120 percent of GDP with bonds representing 55 percent by 2025./.
